Supply Chain Agilityin the Volatile World
12th June 2014
CII Conference of Next Generation Supply Chain
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SCM Role
Business Focus shifts to Customer Experience
Manufacturing is commoditized with excess automation
Competition is fierce in digital age
Value Creation possibilities exist at various points ofsupply chain and need to be taken advantage of toimprove Economic Value add and maximize functionalbenefits
Customer Experience is a factor of Economic Value Add+ Functional Value + Psychological Value
Its linkage to a company is only in terms of TRUST &BRAND
Customer Experience demands Customization
SCM & Brand
•SCM role will evolve into “Delivery of Brand Promise” at maximumefficiency using
–Global Sourcing of parts or services ( ITES)
–Assembling close to consumption to handle customizationcomplexity
–It will straddle Operations + Logistics + Procurement
–It will dictate non-negotiables for Sales
–It will dictate the “realistic boundaries” of marketing
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1.Customized requests
2.Customized supply chain – Point of manufacturing should be closer tocustomer. Hub and spoke model of distribution and replenishment basedon customer pull is the need of the hour.
3.Information Warehouse- Supply chain needs to optimally capture marketinformation and back-end integrated data linked to the customer for futureplanning.
4.Global competitiveness
5.Cost efficiency- Due to margins under pressure in a subdued market, theability to service at optimum costs/ delivery timelines is critical
6.Delivery vehicle of the brand- The supply chain implements the brandpromise of the company as customers’ experience is dependent onflawless delivery of promise of the company.
From Logistics handler to SCM Management has been a Longjourney
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Key Factors to combat Market Volatility
HighPerformersto have
Stakeholderconfidence
OperationalAgility
CustomerReach
CostCompetitiveness
Flexible SupplyChain
Strategic CostReduction
Prioritize and FocusMarket
Identify
and explain risk
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Agile Supply Chain Strategy
Long lead time
Short lead time
Supply
characteristics
Demandcharacteristics
PredictableMarket
Unpredictablemarkets
Plan andcontrol
JIT: Pullscheduling/Replenish
React and execute:agile capabilities
Hold inventory:
hedge and deploy
Information System Challenge
•Variability management requires two – pronged approach
–A Great IT System with inbuilt business insights to ensureefficiency
–An insightful and creative Management team to ensureEffectiveness in meeting customer needs and shift orbits for theorganization dynamically
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Both are needed and need to balance each other
Too much of IT can lead to excessive Abstraction of business andobliteration of Horse Sense – resulting in catastrophic errors
Too much manual management will lead to co-ordination failures andlack of responsiveness
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Distinguishing Characteristics of Agile Supply Chain
Supply Chain is capable of reading and responding to real demand.
Adapt to demand and seasonal trend
Postponing allocation to a later date thereby improving accuracy insupplies vis-à-vis demand
Listen to system’s early-warning signals and alert customers of potentialdelays so that they have the time to take alternate actions
Avoid lost sales by stocking products which the customers require. Thiscan be based on historical sales data.
Lock down repeat customers who depend on accurate delivery dates andavailability
Use dynamic allocation to reach customers in wider regions and volatileemerging markets
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Seven Success Factors for Agile Supply Chain
1.Engage sales and marketing and understand customers needs
2.Link the financial plan to the operational plan
3.Ensure a cross-functional collaborative process
4.Continuously align strategy with operations
5.Ensure process agility and flexibility through technology
6.Capture metrics for performance management as part of the process
7.Optimize demand-supply-finance balancing
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Thanks